Hello. I would like to know what each of the graphics settings in the default_settings.cfg do, and if not, then their available values. Id also like to know if parallax occlusion is possible with the penumbra games, and if so, how to have it work. I appreciate any reply :3

Parallax and occlusion (SSAO) are two different things. I think both of them are not possible without tweaking the engine. The default_settings.cfs only contains everything what you can change in-game. It is only helpful to force higher resolutions beyond 1280x800 in Overture.